Extracts of a large full page interview of Ratan Tata published in the main daily paper, IL CORRIERE DELLA SERA.

Extracts of a large full page interview of Ratan Tata

published in the main daily paper, IL CORRIERE DELLA SERA.

(07.02.2007, pag 27, full page)

Extracts from the Interview with Ratan Tata, President of the larger Indian group.

Tata/Fiat? A strategic alliance. We will start from the ‘low-cost’ Champion of spiritual capitalism: ‘Wealth must be shared with the people’

By Danilo Taino, who previously published a couple of enthusiastic articles about what he calls “capitalismo d’assalto” (“energetic capitalism”) featuring ‘new Shining India’.

“For the global markets he is the man of the moment… (in connection with the Corus acquisition, the largest Indian one, $ 11 dollars, ever attempted abroad)… and he is now a key figure for Italy as well (…) for his 50-50 alliance with Fiat that could set the paradigm for Italian industry’s ambition (sic!) in India.”

The journalist goes on sketching in short the man:

“69 yrs, heir of a Parsi family of iranian origins, that over the yrs was able to build in India a conglomerate that goes from cars to steel, from tea to the hotels, from HT consultancy to mobile phones, in this interview Ratan Tata has agreed to speak about the history of the partnership with Fiat, from its initial steps; and about its development in the future. A relationship that he defines as ‘strategic’. As for his view on capitalism: he underlines his enlightened, so-called “spiritual” approach, to business”.

Questioned about what will change in Tata after the acquisition of Corus, he answers that

“something will change, from a turn over of $ 23 billion last year, we’ll be beyond $ 40 billion: we will be more international, with a stronger presence in Europe. But for the next two or three yrs Corus will remain separated from our Steel business (…) a special committee will work on this gradual integration.”

As for the possible decrease of engagement in the Motor Sector:

“The Motor sector has always been not less important for us than the steel sector (…) if the steel is our raw material, the brand and public visibility come from the Auto sectors, from cars.

“Talking about cars, how did your partnership with Fiat develop?” the interviewer asked at this point.

“It came with the fact that at some point Luca Cordero di Montezemolo (Fiat President) was in India with an official delegation from Italy. He approached me, together with John Elkann (Fiat Vice-President) and they asked me whether I could help Fiat to regain some market shares in the Indian market. (…) Quite a strange request, coming from a brand that could be considered a competitor in our same segment of market…” Ratan Tata recalls, adding that he was tempted to say No

“And why did you decided to accept?”

“For two reasons. 1rst Jrd Tata was a great friend of Gianni Agnelli (the late Fiat supremo, and a glamorous figure during Italian post-war period), therefore it was a friendship between families that I wanted to honour. 2nd: I considered that Fiat was responsible for the beginning of the motor industry in so many developing countries like India and Egypt. They deserved our help…”

“Such a risky decision” is the Interviewer comments at this point “

Fiat was in those days breaking a deal with General Motors, it was in deep crisis!”

“For us it was mainly an emotional issue” answers Ratan Tata magnanimous. “Tata is a group that never refused to help a competitor when he was in difficulty. (…) I considered at that point a completely different set of questions : how could we help each other? How to build platform in common? How to share the individual technologies with mutual benefit? And how could it be possible to develop a market in the interest of both?”

At this point the crucial question:

“Could Fiat be in partnership also for the project of car for the masses (sic), the famous One Lakh Car, the 2000 Euros Low-cost car?”

Answer: “Sergio Marchionne (Fiat General Manager) seems very interested, he believed that through Fiat’s channels this car could be sold in Latin America as well. However, the project is already quite advanced, we are planning to sell the 1rst vehicles in 2008 (…) And there are markets that we could develop in Joint Venture, not only with this small car.”

“What sort of philosophy is behind this 2000 Euros car?”

“India is a country with more than 1 billion people, and 40% are below 20 yrs of age. We have a middle class of 250 million people and perhaps 3-400 millions still live below the poverty line. All these people need a way of transport and till now this need was answered by two wheelers. This idea for a small car came to me the day I saw a father who was riding a motorcycle with his son sitting on the tank and the wife behind him, with another baby in her arms. Why they could not have a more suitable, safer mean of transport…

We explored the feasibility of this idea for a couple of years: a scooter with four wheels? A differently assembled scooter? At the end we decided to come out with a new project, starting from scratch.”

And here the crucial question: “What about the production facilities?”

“We will produce it for the 50% in a new plant in West Bengal (where there are some political problems that Tata minimizes - the interviewer is accurate enough… to add). For the remaining 50% we will encourage the creation of a number of small assembly shops, low cost, all over India. This will be our contribution to the entrepreneurship among the youth of India.”

Last but not least about philanthropy:

“Yours is a group famous for being a workplace where workers are treated better than anywhere else: the children of your employees had free school going back to 1917, how can it be possible?”

“In our family we always believed that the wealth has to go back to the people. It has been for us a main pillar of behavior over the centuries. The 65% of Tata Sons is owned by philanthropic funds: therefore, also the 65% of the dividends goes in favor of various projects, from education to medicine, to the general betterment of lifestyle of the people, in terms of donations. In total: 45 million dollars, last year. On top of that: 85 million dollars given away directly from the various branches of the conglomerate.”

“And nobody ever protested, among your Indian investors?” is the incredulous question from the journalist.

“Never from India (…) only from abroad: outside India they say that money belongs to the shareholders. I always explain that doing in the way we do, there is a minor social pressure on the balance sheets of the companies and (sic!!!) a lesser number of strikes. The plus is evident for us …”